A San Francisco federal judge has recently ruled that Electronic Arts founder William M. "Trip" Hawkins III cannot use bankruptcy to wipe out more than $20 million of federal and state tax debt.
Hawkins and his wife filed for personal bankruptcy in 2006, according to Forbes, listing assets of $5 million and liabilities of $28 million. The latter was mostly composed of state and federal tax debt, which he was unable to rid himself of, as state and federal tax agencies successfully avoided discharge using a provision of the bankruptcy code that prohibits tax debt discharge if the debtor "willfully attempted in any manner to evade or defeat such tax."
It was alleged that Hawkins used abusive shelters to shield his Electronic Arts profits from taxation, according to the news source. In 2010, the company had four video game titles that sold more than 4 million copies, according to the Electronic Arts website.
Now, US. District Judge Jeffrey S. White upheld an earlier ruling forbidding Hawkins' tax debt discharge on the grounds that the businessman continued to spend extravagantly despite knowledge of his tax liabilities.
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